Investigation - not always disqualification

Posted

Following a company liquidation the Insolvency Service will consider whether to investigate the conduct of the company directors. Ordinarily, the Insolvency Service will write to the director to inform them that following the obligatory report from the administrator or liquidator an investigation will take place to establish whether it is in the public interest to pursue civil proceedings against them to obtain a disqualification order.

At this stage, it is wise to seek legal advice in order to understand what the implications of that investigation are going to be and draft a response.

Stephensons recently acted for a director in receipt of such a letter and we were able to assist them in the very early stages.

As a result of this prompt action we were able enter into communication with the Insolvency Service and establish the areas under scrutiny which required further investigation. In this case, our client was co-operative and transparent throughout the process and the information required by the Insolvency Service was provided and explored in full.

The Insolvency Service raised concerns over information which was not made readily available to them and for the liquidator in the case. This resulted in a degree of suspicion cast on the conduct of the director.

By working together with our client we were able to locate the missing information and present to the Insolvency Service. As a result, we received confirmation from the service that the investigation was complete and no further action would be taken against our client.

It is often the case that investigations become necessary as much due to missing information as to that which is available. Missing documents and details can sometimes be viewed in a poor light and cast doubt on the conduct of the director.

With the correct legal guidance, it is possible to secure the missing information, account for its absence and clarify issues which might have come under the scrutiny of the Insolvency Service. This can lead to a successful conclusion, without the need for any disqualification orders or other undertakings.

Insolvency Service investigations do not always lead to a disqualification order or undertaking but it is crucial to take early advice.